What's the point of that? If you're an employee with stock options you aren't going to see a dime of the profits. You need an IPO or acquisition to make all those extra overtime stock options pay off.
See: the SAS Institute model of profit sharing, which they began shortly after forming the business. It has endured in an extremely successful manner for four decades as SAS has remained private.
To put this into context. Facebook will likely hit ~$17 billion in profit for fiscal 2017. They have 20,000 employees. If their only obligation was to employees as owners, they could very safely distribute half a million dollars per year perpetually to every one of their employees (while distributing billions to the early shareholders). This model would have vastly outperformed the IPO model as far as the VC firms are concerned (specifically as far as their institutional capital suppliers are concerned). Most VC investment gets liquidated early on, shortly after the IPO (the same happened with Google, most of the early backers bailed not long after the IPO, or their returns to date would be comically higher; Peter Thiel made the same choice with his Facebook position, selling a lot of it early after the IPO).
It's only better in hindsight, with a prior knowledge that Facebook is a mega-unicorn.
But VCs make decisions with limited information, based on probabilities, and in this case going for an earlier payout via IPO or selling the company is a more rational option.
Maybe if profitability is the goal (and not an IPO nor acquisition), then maybe offering stock options in the first place is a misaligned bad idea. Maybe a better idea is structuring a profit sharing plan? (Or if the options are offered anyway, possibly using that stock as a way to pay dividends someday.)
Many established companies have something called a profit sharing plan, where a percentage of the profits is actually distributed to the employees.
I actually worked at a company that had that, and we wound up with roughly a $5K bonus every year. Better than nothing, and actually more than I've made off of stock options, which is nothing. Actually it's negative, seeing I exercised some of them.
Current model is all about building a giant company that would IPO for a bazillion, making investors wealthy, and founders/early employees well off. But indeed, why not build a company that can revenue-share with employees, stay small(ish) and nimble, and make everyone well off, without expecting some 1-in-million event to occur. Isn't this how companies were built, at some point in the near past?
There's a hybrid approach: Indie.vc. It's a VC investment, but the focus is on profitability and sustainability. The terms of an Indie.vc deal let them get paid back via traditional methods (IPO, acquisition), but more importantly, there's also an optional/alternative cash distribution sharing mechanism for paying out via profits over time.
It's not an option on the table if you ever get VC money. VCs want you to sell down the road, because if you stay in control they can never make any exit. It's an implicit agreement that you enter with VCs from the get go.
